Their plan would sideline middlemen in the pharmaceutical supply chain known as pharmacy benefit managers — or PBMs.
As hundreds of pharmacies close across Pennsylvania, pharmacists are asking state lawmakers to pass a bill that would see the commonwealth play a bigger role in how they’re paid for drugs dispensed to Medicaid patients.
Their plan would sideline middlemen in the pharmaceutical supply chain known as pharmacy benefit managers, or PBMs, which have come under increased scrutiny in recent years.
The bill, sponsored by Community Pharmacy Caucus co-chairs, Sens. Judy Ward (R-Blair) and Lisa Boscola (D-Northampton), is based on an Ohio law that officials say has saved that state tens of millions while increasing payments to pharmacists for drugs they dispense.
Issues facing community pharmacists have become a focus for many legislators in the last few years. According to a group called Pennsylvanians for Protecting Pharmacy Access, more than 1,000 pharmacies have closed across the commonwealth since 2020.
And they’re blaming PBMs.
Critics say the middlemen have contributed to the rising cost of drugs and driven down pharmacies’ bottom lines, leading to a wave of closures around the country. They’ve also faced scrutiny from state lawmakers and federal regulators.
When an insured patient picks up a script, paying only a co-pay if anything, it’s the PBM that reimburses the pharmacist on behalf of their insurance plan. But pharmacists say the rates they’re reimbursed at have been dropping steadily for years, and there’s little they can do to stop it.
The three largest PBMs are each owned by some of the largest companies in the country, which also each own their own insurance and pharmacy companies. Those three —CVS Caremark, Express Scripts and Optum Rx — manage an estimated 80% or so of all prescription drug claims by insured Americans.
Pharmacists say that means they’re forced to accept the low reimbursement rates those PBMs offer, which can mean losing money on drugs dispensed or being unable to accept insurance from a large number of potential patients, some of whom use medications that net pharmacies profits.
A spokesperson with the Pharmaceutical Care Management Association, a trade group representing the country’s largest PBMs, did not respond to a request for comment. But the group has long held that PBMs support local pharmacies, and seek to ensure their patients have adequate access to pharmacies.
Ward and Boscola’s bill aims to make certain pharmacists are reimbursed at fair rates when dispensing drugs to Medicaid patients. According to the state Department of Human Services, roughly 23% of Pennsylvanians use Medicaid.
Medicaid plans are provided by a host of insurance companies, each of which can contact a PBM to handle the prescription benefit side of their plans. Instead, under Ward and Boscola’s bill, the Department of Human Services (DHS) would hire a single company to handle the prescription benefits of all Medicaid plans. It would also require pharmacists to be reimbursed for drugs based on the national average drug acquisition cost, and be paid a dispensing fee.
The goal is to stem pharmacy closures by ensuring the businesses aren’t operating at a loss because of low reimbursement rates.
For many Pennsylvanians, especially in rural areas, pharmacists are some of the only health care professionals they can see near their home, for free, to receive medical advice.
“I represent rural areas,” Ward told the Capital-Star. “Pharmacies are just dying here … So it’s not that you’ve got to drive to the other end of town, you’re driving sometimes into the next county to get your prescriptions filled, which creates all sorts of problems.”
“Normally I’m a free enterprise-minded person, so let’s allow more competition,” Ward added. “But that has not worked in this instance. So we feel,with a single PBM, there can be better control.”
Boscola, the bill’s Democratic co-sponsor, says the move could also save the state money.
“Ohio shifted to a single PBM model and saved $333 million in just two years in administrative costs alone,” she said. “The change also allowed $700 million in dispensing fees to go straight to pharmacists. Our pharmacies throughout the state have been sounding the alarm bell for years, and it is time to finally take action.”
The bill was authored with input from advocates with the Pennsylvania Pharmacy Association and the Philadelphia Association of Retail Druggists, two trade groups representing independent and small chain pharmacies across the commonwealth.
Ward is also co-sponsoring a bill with Sens. Wayne Langerholc (R-Clearfield) and Pat Stefano (R-Fayette) that would give the Pennsylvania Attorney General more power to mediate between pharmacies and PBMs when contract disputes arise between them, and weigh the impacts on local communities.
As it stands, pharmacies have little recourse if a large PBM cancels a contract with them, leaving many of their patients unable to use insurance to cover drugs purchased at their store. The measure would give the Attorney General’s office authority to review contacts when they’re renewed or when they’re terminated.
In 2024, lawmakers passed a bill aimed at reining in PBM practices described as anti-competitive, but it was lacking key provisions requested by pharmacists. Lawmakers have raised concerns that the state is not doing enough to enforce the new law while pharmacists have pointed out the need for more reforms.
The bill did not affect reimbursement rates for medications directly.
